The Israel Innovation Authority identified the potential of the fintech market as early as 2011 and launched the 'Financial R&D Centers' Program with the objective of encouraging leading international financial entities to establish fintech R&D centers in Israel (a field which until then had been underdeveloped in Israel) and to transform Israel into a world fintech center. As part of the center, two leading global banks – Citibank and Barclays – set up R&D centers in Israel with Innovation Authority support. The program contributed to the development of this market and during its operation, the scope of global and local investment in Israeli high-tech reached more than 2 billion dollars.
Today, Israel is considered, even by international standards, a developing fintech center. Hundreds of companies operate in fields such as credit, investment and savings management, payments and money transfers, clearing, capital markets, the insurance industry (Insurtech), crowdfunding, blockchain, and cryptocurrencies. The ecosystem has expanded with the entry of further global players and dozens of global companies currently maintain financial-technological activity in Israel.
Furthermore, additional international banks have arrived in Israel in recent years to establish fintech accelerators, alongside the involvement of the local banks in existing accelerators and increased exposure to the world of fintech. Fintech is one of the prominent sectors attracting significant capital and several Israeli companies have even issued stock on different global stock exchanges (including in the US).
Nevertheless, companies developing unique technologies in certain areas of the fintech market are still finding it relatively difficult to attract funding. These include companies engaged in the war against financial crime (identifying fraud, identity management, preventing money laundering), blockchain (automation and security of smart contracts), cryptocurrencies (secured wallets, secured and/or cancelable transfers), and more. The Innovation Authority therefore continues to support areas of fintech characterized by a market failure or those fields providing Israel with a unique advantage. At the same time, the Authority has established collaborations with the Israel Securities Authority and encourages local pilots so that Israeli society as a whole will benefit from the technology being developed by Israeli high-tech.